TORONTO — Reuters Published on Thursday, Apr. 02, 2009 4:55PM EDT Last updated on Friday, Apr. 10, 2009 6:43AM EDT
International Business Machines Corp. and Sun Microsystems Inc. may announce a takeover deal next week, a source with knowledge of the matter said Thursday, showing IBM may be completing a lengthy review ahead of what would be its biggest acquisition.
The source, who was not authorized to speak publicly about the deal, said a final price was not set, but IBM may pay Sun around $9 to $10 (U.S.) a share.
The Wall Street Journal earlier reported IBM reduced its offer to $9 to $10 a share from a previous $10-to-$11 range.
IBM and Sun officials declined to comment.
A takeover of Sun would give IBM a clear lead in the $45-billion server market against Hewlett-Packard Co. and Dell Inc. It would also broaden IBMs software portfolio, add storage products that compete with EMC Corp and Network Appliance Inc. and provide an edge over Cisco Systems Inc., which some see as its biggest rival in the long term.
A deal would have the most impact on IBMs high-end server business, giving it 65 per cent of a market worth some $17 billion, versus 27 per cent for HP. It would also bolster IBMs highly profitable software business and help ensure the survival of much-smaller Sun.
But some analysts say Suns lacklustre performance could hurt IBM. Sun rose to prominence in the 1990s, but never fully recovered after the dot-com bubble burst earlier this decade, and failed to make much profit from software products like Java and Solaris.
Some analysts also say the deal could spark antitrust scrutiny as customers and suppliers raise concerns about competition.
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